My Favorite Rich Dad Poor Dad Advice

If you have visited my site for even a short time, you know that one of my favorite books is Rich Dad Poor Dad by Robert Kiyosaki. I gave it a 5-star- review, it has inspired cartoon strips, and I talk about it in many articles. Why do I like Rich Dad Poor Dad so much. It is not because it gives you a step by step plan to get rich (because it does not). Nope. Instead, it is filled with small nuggets of wisdom that you can use on your road to riches.

Rich Dad Poor Dad Advice

Let’s get to it. What is my favorite Rich Dad Poor Dad Advice? There are two pieces of advice.

Don’t say “I can’t afford it”. Ask, “How can I afford it?” This is one of the most powerful vocabulary changes you can make in your life and in your kid’s lives. Let’s think about it for a second. If your 16 year old asks you, “Dad, can you buy me a car?” and your answer is “I can’t afford it,”, what does that teach your 16-year-old? First, that is the lazy answer. By answering this way, you mentally did a bank account assessment and then said no. Your brain barely did any work – it just shut down. Second, you missed an opportunity to help build problem solving skills with you kid. In, Rich Dad’s Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not!, Kiyosaki tells a story about a kid like the one mentioned above. The dad gives his son $1,000 and an subscription to the Wall Street Journal and tells him that he needs to make enough money for the car. After a few missteps, the kid is successful and has put in more time studying investing than that Dad could have ever bought with $1,000. If you tell your kids, “We can’t afford it,” then you missed the opportunity to help your kid:

Understand what something costs

Learn how to budget

Learn how to save and sacrifice

Learn how to make money (not earn it)

You make money when you buy something, not when you sell it. Wow! This was a game changer for me. How many times have you bought an asset (a house, a stock, collectibles) and hoped it would go up. When you bought it, did you pay the asking price or did you negotiate? When that stock was going up, up, up, did you say, “I have to buy that!” If you did, you need to read my articles about the Odd-Lot Theory. Instead, you when the stock market tanked in 2008, you should have thought, “Wow, everything is on sale!” It all comes down to perspective. Think about the next house you buy. Are you going to go in with an offer that that is fair? Or, are you going to do some research and make an offer that will make you money when you sell a house. In a neighborhood that my wife and I like, two houses went on sale for $245,000. Both houses were 3 bedroom, 2 bathrooms. Both had the same number of rooms and were brick houses. One might think that the two are worth about the same amount of money. But, wait. One house was 1,600 square feet while the other house was 1,800 square feet. The larger house also had many upgrades. With this information, let’s break down the numbers. The larger house sold for $136 a square foot. That was comparable to many other houses in the neighborhood. At $136 a square foot, the smaller house was only worth $217,000. Don’t forget that there were a lot fewer upgrades that would drag the price down about another $10,000 leaving it worth about$207,000. That is a $28,000 difference. Do your research and know what to offer.

There are many pieces of wisdom in Rich Dad Poor Dad and I will continue to write about them because they will help make you rich. Sign up for my mailing list and you will get notified when I write each of the articles.

What is your favorite Rich Dad Poor Dad advice? Share it with us in your comments section below.